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The speech made by Alistair Darling, the then Chief Secretary to the Treasury, on 24 April 1998.

Introduction

The Chief Secretary is usually as welcome as the grim reaper. And we usually come with the same message.

Today I want to set out how we must build a stable economic platform to provide sound public finances in the future. And how it is essential that we take a new approach to Government. How the process of modernisation in Government and economic management has to continue.

We were elected to government just under a year ago. The night of 1 May last year saw a complete change in the political landscape – not just in Scotland but throughout the whole of the United Kingdom.

We are very conscious of the faith invested in us. People right across the country give us their trust. And we are determined to return that trust – delivering our election pledges – doing what we said we would do.

The People voted for change – not just for a new Government but for a new political approach. Not for a return to old fashioned corporatism any more than a misplaced faith in neo-Liberal individualism. They voted for a new approach which recognised the complimentary role of government and individual effort.

And they voted for a Government that would look to the long-term.

We said that rebuilding the country would take time. And it will. But in this, the first year of the new Government, we have begun to put in place the building blocks we need.

Economic Stability. Sustainable public finances to provide high quality public services. Modernising the Welfare State. Encouraging work and making work pay. Promoting enterprise. Encouraging investment. Building a fairer society. Supporting families with children. Tackling poverty.

And of course constitutional change – handing power to the people.

Constitutional Change

Constitutional change. A year ago many people said it would never happen. Now – less than a year after we were elected – the Scotland Bill has almost completed its passage through the House of Commons. And elections to Holyrood will take place next year.

The Welsh Assembly Bill will shortly be going to the House of Lords with elections in Wales next year too. And that’s not all.

We’ve incorporated the European Convention on Human Rights. A Freedom of Information Act will be introduced. Abolition of the right of the Hereditary peers to sit in the House of Lords is on its way.

But people will judge those constitutional reforms not as an end in themselves but by what they do to improve the quality of our lives.

The Scottish Parliament will be judged by the calibre of its members, the quality of its decision making and above all by what it does to deliver a first class education system, an NHS we can rely on, a business environment that encourages job opportunities. It will be judged by its actions.

That’s why we are determined to ensure, for our part, that candidates for Holyrood are of the highest possible standard. People expect nothing less.

Partnership between Holyrood and Westminster

And Scotland will expect Holyrood to work in partnership with Westminster. Last September we voted for partnership not conflict. We voted for a Scottish Parliament within the United Kingdom. We voted for change – not for the sake of change but in the justifiable expectation of better Government to Scotland.

And just as Westminster will have to work closely in partnership with Holyrood, so too will Holyrood have to work in partnership with Councils across Scotland. After all it is Councils that deliver many of the services we all rely on.

And preparations are already in hand to ensure that this partnership works.

Donald Dewar and his team are already working up proposals to allow the Scottish Parliament to get into its stride as quickly as possible.

Scottish Office and Welsh Office officials are already working with Treasury officials and other departments to ensure a smooth working relationship which is essential if Holyrood and Westminster are to work together effectively and efficiently.

And arrangements are already in hand to ensure that Ministers work closely together in the interests in the people they serve.

But we will only get what we voted for if Westminster and Holyrood work together. Because if you stop anyone in the street in Aberdeen, Glasgow or Stornoway and ask them what they want they will say exactly the same thing.

Constitutional change, yes. But now let’s see what you can do.

An education system we can be proud of. That provides opportunity and a first class education for all.

A National Health Service – in this it’s 50th year – that we can rely on. A Health Service that not only cures but prevents illness. A Health Service that is efficient and effective.

Quality housing, better transport. Safer streets.

Constitutional change is being put in place. Holyrood will soon open its doors. Now is the time to prepare to deliver what the people want.

The New Agenda

And it’s to that new agenda that I now want to turn.

Delivering that agenda will depend upon Westminster, Holyrood and councils working together. There can be great changes in the next few years but it depends on us all being engaged in the same common endeavour in the interests of the new Scotland.

The setting up of a Scottish Parliament represents a radical vision. But delivering that vision depends on the determination to work towards the same goal. A dynamic vibrant economic environment. Improving our quality of life. A country of optimism and ambition. Building a new Scotland. Where Government and business work together in partnership.

But that ambition must be built on a secure and lasting foundation.

Delivering that agenda depends on a secure and sound economic platform.

Planning for the long-term

A year ago, this Government came to power because of the failure of the last Government.

We said we would inherit a mess. And we did. Years of underachievement and underperformance.

We said that it would take time to sort it out. And it will. There are no quick fixes.

We said that we would rebuild and modernise this country. And we are.

But rebuilding will take time. This is a Government that is planning for the long-term. For that we need stability.

An end to the boom and bust that destroyed so many business in the past and undermined public services.

A commitment to low inflation – an essential pre-condition of long-term sustainable economic growth.

Without that stability, that long-term sustainable growth, we cannot provide the public services we need. Good quality schools and hospitals need stable public finances.

We are determined to avoid the mistakes of the past. Where the economic miracle of the 1980s became the economic disaster of the 1990s. Where unsustainable booms ended in damaging bust.

There are some who are telling us today that our troubles are behind us. Just like Nigel Lawson in the 1980s. Then he set off on a spending spree where in two years inflation doubled and interest rates soared to double figures.

We will not heed those siren voices. We will not repeat those mistakes for which so many people paid with their jobs and homes.

We will not repeat the mistakes of the late 1980s. Or the mistakes of 1964 and 1974 where the incoming government tried to deliver its promises before sorting out the problems they inherited. That path leads to both political and economic failure.

There are no short-term fixes. That’s why we unashamedly take a long term view. We are determined to be put in place a stable economic platform on which to build for the future. Anything less would be to betray the trust of those who voted for a new approach: a Government that would act in our best long term interests.

Our objective is to raise the rate of sustainable economic growth in this country so that everyone can share in rising levels of prosperity.

After 18 years the people voted for a new start. Not just the same as before. And deliver our commitments we will. And built on a secure foundation.

That’s why we said at the election we would take the tough decisions necessary. That’s why we said would to stick to existing spending limits for the first two years while we sorted out the mess we inherited.

Stability

We can only deliver the economic growth, job opportunities and stable public finances if we keep our attention firmly fixed on the prize of long term sustainable growth and stability. Because that is the only way to provide the schools and hospitals and other services we all want and need.

So I make no apology for the need to repair and rebuild our economy. We are determined to provide stability for the future. It’s in all our interest that we succeed. That is why Gordon Brown in his two Budgets has set about the job of rebuilding and modernising the British economy.

We inherited a situation where the national debt doubled in just 6 years. We spend over 25 billion Pounds a year servicing that debt – more than we spend on schools in the whole country. We inherited a situation where the last Government planned to spend some 19 billion Pounds more than it was going to get in.

The deficit reduction plan will mean that public finances will come into balance over the next two years.

Modernisation in economic approach

We have introduced radical reforms which will build long term sustainable growth.

Firstly, a commitment to economic stability. Our reforms to the Bank of England – giving it operational independence – creates one of the most open and transparent central banks in the world. It has already begun has already begun to deliver. We now have the lowest long term interest rates for 33 years.

The last time they were this low was when Willie Ross was Secretary of State for Scotland – the first time around!

Secondly, we have introduced new measures to help business. To encourage investment and innovation.

Corporation tax is at its lowest level ever. And we have introduced measures to help small businesses and to encourage innovation and research and development. A new fund to convert good University research into good business prospects – helping business and education work together for the benefit of all.

Measures that generate wealth and create new job opportunities.

We are modernising the Welfare State. We have introduced one of the most radical reforms to the tax and benefits system. To make work pay. And to provide opportunities for all, to a whole generation excluded for too long.

We inherited a situation where one child in three grows up in poverty. Where poor families bring up children who themselves become poor when they grow up. A second generation of people without experience of work – denied opportunity, denied hope.

And the tax and benefit reforms will provide for those who need it most.

Making Work Pay

The new Working Families Tax Credit is the most radical reform of the tax and benefits system for a generation. It will make work pay.

For families where someone works full-time, there is now a guaranteed income of at least 180 Pounds per week.

And to that same working family a second guarantee, that no income tax at all will be paid on earnings below 220 Pounds a week.

We inherited a system whereby a family with two children paid tax even when they earned only 25% of average earnings.

Now they will pay no income tax until they earn over 50 % of average earnings.

And we have taken other steps to remove barriers from work for parents.

That is radical reform. A radical transformation that makes work pay.

And as part of that reform we have introduced the new childcare tax credit as part of the Working Families Tax Credit. It will pay up to 70% of the cost of childcare, up to a limit of eligible costs of 100 Pounds per week for one child or 150 Pounds for two children ormore.

We are introducing a National Childcare Strategy thoughout the country. An extra 25m Pounds of money for Scotland will help set-up new out-of-school provision.

This is major and radical reform of the system. Modernising the Welfare State. Putting the emphasis on work. Helping people into work. Making work pay.

This is essential to increasing the capacity in our economy. You all know that people are better off in work than they will ever be on the dole.

Child Benefit will increase next year by the largest single amount ever. We are determined to channel resources to where they are needed most – to children.

And the Government’s Welfare to Work initiative – the Pathfinder Project for 18-24 year olds – was piloted in Tayside. And it has been successful in Tayside. Over 1000 people have entered the New Deal in the first 14 weeks and over 420 employers have signed up to the programme.

The New Deal is a flagship programme which shows how Government, public and private sectors can and work together. There is a common cause in getting people into work. Its good for them and its good for the country. The New Deal has already seen thousands of people sign up. Employers and employees coming together.

For years now we’ve campaigned against unemployment. Now we are delivering real jobs. Good training. New opportunities..

We have set up a new Employment Zone in Glasgow. This will pilot a range of initiatives to get people off benefit and into work. It will put us on the road towards the creation of Personal Job Accounts.

These Accounts will allow unemployed people to move resources between benefits, training and part-time employment to help them get back into work. Glasgow will be at the forefront of new developments – it will be an example of our new approach. It will strike at the heart of the problem. It will link these without work, with the work that needs to be done.

A Government that helps provide opportunity where there was none.

And we recognise that the local government settlement in Scotland, England and Wales was tough this year. But it was tough for everyone. However, it was better than it would have been under the Tories. And it was necessary if we are to build for the future.

So these reforms underpin our approach. Economic stability. Reform of the Labour Market. Modernising the Welfare State. Helping families with children. A fairer and therefore a more efficient society. And there are more reforms to come. The modernisation will continue.

All these measures will build the economy and with it long-term sustainable growth. And that growth is necessary to generate the wealth we can depend on.

Public Spending

So we are building a platform for the future. And as we promised we are conducting a root and branch examination of all Government spending. Started last year, immediately following the election, the Comprehensive Spending Review, will be completed this Summer.

We said that we would conduct a root and ranch examination of every penny spent by central Government – all 350 billion Pounds of it. And not just the amount spent, but the policies that underpin that spending. A radical Government must be prepared to reject failed policies of the past and embrace the changes needed for the future. A radical Government – like local government – has to make choices and set priorities.

The conclusions of the Review will be published in the summer. It will set out the priorities of this Government for the rest of this Parliament and beyond.

The Government will deliver its promises. But we will do so on a prudent sustainable basis. Hard choices do have to be made to meet our priorities. We will maintain rigorous control of public spending because that is necessary to achieve sustainable long- term growth.

And we’ve already shown how choices can be made. How our priorities are different from the last Government. In the last year we have made significant changes to spending priorities because we maintained rigorous control over spending. We have redirected existing resources to meet our objectives.

New Priorities

We have invested an extra 2.5 billion Pounds to improving schools, including 1.3 billion from the windfall tax to improve school buildings and equipment. That would not have been done but for the change in Government.

We introduced the Bill to abolish the assisted places scheme. A scheme under which the last Government unashamedly backed the few at the expense of the many. This money has instead been ploughed into public education. We abolished the nursery voucher scheme. Our priority is for the many and not for the few.

We have invested an extra 2 billion Pounds in the National Health Service. We have scrapped the wasteful and inefficient Tory internal market. Sam Galbraith’s White Paper on the future of the Health Service has been widely welcomed.

And all pensioners are getting cash payments to cope with winter fuel bills on top of the cut in VAT to just 5 per cent. The poorest pensioner households in income support are receiving 50 Pounds.

And there’s more.

We’ve introduced extra targeted funding to improve literacy for young children. A total of 24 million Pounds for the early intervention programme over the next three years.

We’ve introduced 3 million Pounds alternative to exclusion grants scheme to develop additional alternatives to children being excluded from school.

We’ve tackled the crisis in higher education funding with new plans for the funding of student maintenance and tuition. In the long term these will release funds to widen access to agreed standards at the universities and colleges.

We have ensured that there will be an addition 8 million Pounds for further education institutions next year.

And next year we’ll make an additional 17 million Pounds available to higher education institutions.

And housing – we provided an extra 15 million Pounds this year and an extra 51 million Pounds next year to be spent on new housing partnerships – covering energy efficiency and other housing initiatives.

The empty homes initiative gets 2 million Pounds this year and 7 million Pounds next year.

The rough sleepers initiative will get 16 million Pounds in total across Scotland.

And we have delivered many other measures in that short time. This is just the start. The CSR will set out our priorities for the rest of this Parliament and beyond.

But we will only be able to deliver the high quality public services that we need if we have a stable foundation on which to build them.

Scotland and the Global Economy

And that stability is essential for the whole country.

Westminster, Holyrood, local authorities have the same long-term interest. We are all part of the same economy. And increasingly not just the British and European economy but the global economy. It isn’t possible to go it alone – create an economic island in isolation from the problems that everyone has to deal with.

There is no room for opting out. Pretending that fundamental problems are for others.

We recognise that the global economy has changed everything. We are interdependent. As we know, what happens on the other side of the world affects us here. And in the global economy what will mark us out are the skills, adaptability and employability of the workforce.

We now have economic objectives which are open and clear – which look to the long term. And we have a new approach where Government – at levels – needs to work with business and individuals in partnership – recognising each others strengths. Finding new ways of working together.

A New Approach

As we prepare for the new Parliament at Holyrood, we realise that modernisation, not just of institutions, but of approach must continue.

We must examine our approach right across the board.

This Government is committed to increasing investment. But investment accompanied by reform – whether its in education, welfare to work, childcare or health. The successful economies are those which can adapt at every level. Where change is embraced.

Scotland is rightly proud of its education system. But we cannot rely on reputation alone. We must examine our schools and universities and ask ourselves how standards can be improved.

We cannot shy away from change and innovation. It was our ability to innovate that made Scotland in the past. And the same spirit of innovation will make Scotland in the future. But we can only do that if we embrace change – look at new ways of doing things.

People don’t want the new Scottish Parliament to cling to the past. To seek refuge in the old ways. They voted for change.

I want people to come to Scotland not just to see our heritage, but to praise our innovation. In business. In education. That’s what made us in the past and that’s what will make us in the future.

We’ve put in place a new system for funding higher education with student tuition. Because aspirations for improvement are not enough. Aspirations have to be accompanied by reform if we are to ensure stable funding in the future.

In the Health Service – there are far too many hospitals in desperate need of replacement and renewal.

The public sector alone cannot meet all the problems we inherited in an acceptable timescale. And new forms of management -getting the best of both public and private sector – can deliver a better service. What matters is the quality of service that the patient receives.

That’s why we are working in partnership with the private sector – to bring forward investment that would never otherwise have taken place. And why we have set up the new Business Forum – so that business and Government works closely together.

And in local authorities too – where a substantial amount of innovation has taken place over the years.

At its best the public service provides excellent service. But we all know that that service can and does fall below standards we deserve. Second best isn’t good enough.

The people deserve better. Councils should be the champion of the people who elect them and not the defenders of institutions where they know they could do better. It is the quality of service that matters.

For us – as it should be for you – what counts is what works. Public and private sectors in partnership.

And that must be the approach for the Scottish Parliament.

We must change – not just the procedures – how members address each other – where they sit. But fundamentally we need to look at the way in which services are delivered. If we don’t reform and modernise, we will not build a new Britain or a new Scotland. Not a doctrinaire approach – but a practical one. What counts is what works.

Conclusion

The people voted for change, not just in structures and procedures but for a better quality of life.

This Government has a different economic approach. We are a radical reforming Government.

So too must the Scottish Parliament embrace change. It starts with a clean slate.

New ideas to be examined.

Partnership between Westminster and Holyrood. Between public and private sector. Setting the old conflicts behind us. Pursuing new objectives shared in common. All of us – Government – Business – Education – Councils – working together.

In May last year the people of Scotland voted, in large numbers, for change.

And they voted in large numbers for constitutional change last September.

It is now up to all of us – wherever we sit – Westminster, Holyrood or in Council chambers – to show what we can deliver that new modern confident Scotland.

It is on that that we shall be judged.